Transportation Department leaders are gearing up for a long-predicted autumn budget battle that poses a threat to NextGen, the decade-old $40 billion-and-rising program for modernizing air traffic control technology systems.

On Sept. 19, an industry-government advisory committee created by Federal Aviation Administrator Michael Huerta will meet to set priorities for the FAA under varying budget scenarios. “The [Obama] administration continues to urge Congress to act to replace the damaging cuts imposed by the sequester with a balanced approach that reduces the deficit while protecting critical priorities,” the FAA said in a statement to Government Executive.

Any final transportation appropriation, continuing resolution or grand budget bargain this month or next will have to reconcile a funding level for the modernization program envisioned by President Obama and appropriators in the Democratic-controlled Senate, with a less-expansive House Republican-led plan.

As approved by a committee in July, the House would allocate $439 million below sequestered 2013 levels for FAA facilities and equipment that is vital to NextGen, a 22 percent cut that is $623 million below the administration's request for 2014.

“Under the sequester and the current climate of fiscal uncertainty, the FAA needs to make sizeable budget cuts that affect our operations, NextGen and our future,” Huerta said at a July 17 House Transportation and Infrastructure Committee hearing, in which he asked Congress to cancel the sequester. The across-the-board budget cuts have cost the FAA $637 million since March.

“This uncertainty undermines the roadmap that the FAA and Congress laid out for NextGen,” Huerta said. “It was only last year that we all agreed that these goals were extremely important to protect the great contribution that civil aviation makes to our economy.”

The Office of Management and Budget also objects, saying that funding level--roughly equal to that of fiscal 2000 -- would significantly slow down, if not terminate, several aspects of FAA’s maintenance of current facilities and equipment, and the modernization of the nation's air traffic control system. OMB further warned that the committee’s approach would cut “critical infrastructure programs, such as back-up electrical power systems, which are essential for maintaining reliable and safe control of airspace during commercial power outages.”

Equally alarmed, according to Government Executive interviews, are representatives of air traffic controllers, the airports and the travel industry.

Republicans budgeters -- as part of their larger-picture goal of shrinking the government -- say NextGen’s future funding and success depends on addressing some FAA management shortcomings, a reason for the agency to do more with less. In the committee print accompanying its bill, the House Appropriations Subcommittee on Transportation, Housing and Urban Development, singled out delays in NextGen’s En Route Automation Modernization system, which is replacing a 40-year-old high-altitude radar tracking system. FAA has spent 65 percent of that budget, but major city airports remain without the new system.

“Going forward, there are important lessons learned from [the en route modernization] that FAA needs to address to better manage its NextGen portfolio and reduce risks when deploying software intensive systems,” the Republican appropriators wrote. “These include better expectation setting for the controller workforce, addressing shortcomings in testing at the FAA Technical Center, bolstering government acceptance, and more effectively using contract incentives for both development and implementation.”

Rep. Frank LoBiondo, R-N.J., chairman of the Transportation Aviation Subcommittee, raised concerns about the FAA’s “ability to effectively and efficiently implement NextGen. I’ve heard that some ‘transformational’ NextGen programs aren’t truly transformational, that the FAA will never make the tough decisions required to advance NextGen, and that nobody can really agree what NextGen is today or what it should be in 2025.”

Republicans point to Transportation Department Inspector General Calvin Scovel III’s testimony from July 17, stating, “FAA’s difficulties with advancing NextGen stem from a number of underlying causes, including the lack of an executable plan, unresolved critical design decisions, undefined requirements and stakeholder skepticism.”

Scovel cited a need to obtain user support in integrating performance-based navigation routes and procedures to save fuel, and said FAA faces “cost and schedule risks with its efforts to modernize automation systems that controllers use to manage traffic at both terminal and en route air traffic facilities.”

But industry remains concerned about long-term shortfalls, especially since Congress in May passed a bill to head off sequester-related furloughs of air traffic controllers largely by moving $250 million out of the Airport Improvement Program. “That onetime use, if it were guaranteed as an absolute onetime use, would be one thing,” said Chris Oswald, vice president of safety and regulatory affairs for Airports Council International -- North America. “Our big concern is that it’s an attractive expedient to solve an immediate crisis.”

He added: “The indications right now from [Capitol] Hill and FAA are positive -- they don’t want to go back to the well for the Airport Improvement Program. But when another operational crisis hits, probably about the same time as last year, I’m not sure how much those assurances may be worth.”

Paul Rinaldi, president of the National Air Traffic Controllers Association, said short-term exercises in reallocating funds away from airport improvements “are really taking up a tremendous amount of time and are an incredible waste of resources. We’re not even focusing on the real picture of modernizing air traffic,” he said, “which is a moving target we don’t know how to hit.”

Rinaldi said he considers sequestration “kryptonite to NextGen.” While some people think the country simply spends billions and “ 'Poof! It’s going to be,' in fact, a lot of human resources are going into developing, maintaining and implementing NextGen technology slowly and methodically while continuing to run the existing system at full speed,” he said. Even the FAA, when it lets contracts, he added, “doesn’t take into account design, implementation, testing and training, and that a [piece of] equipment may cost three times as much” as planned.

Anytime FAA monies involving facilities and equipment are “shifted, you’re digging yourself more into a hole,” said Ali Bahrami, vice president for civil aviation at the Aerospace Industries Association. If Congress enacts another $700 million cut in FAA, he said, “that means do whatever you can to get daily operations going. So you eliminate travel, overtime and get rid of some contracts and have a hiring freeze on controllers so there’s no new blood in system.” He noted that NextGen is a collaborative effort, and “anytime you delay implementation, you will have a negative impact on the future.”

Airlines for America, the main carriers’ group, appeared less alarmed. “We expect Congress and the White House will ensure that the traveling and shipping public are not impacted by sequester, as they were in April, and believe that air traffic controllers, who are front-line safety professionals, should not face furloughs,” the group said. The airlines added that slow progress on NextGen predates the sequester, and “the airlines have said all along that we need to realize benefits from existing NextGen-equipped aircraft and that FAA needs to implement policy and procedural changes necessary to facilitate the transition to NextGen.”